Dr Gill Morgan, chief executive of the NHS Confederation which represents over 90 per cent of NHS organisations, said:

“NHS organisations have been working harder than ever to achieve financial balance in their income and expenditure by the end of the financial year. This is a challenge for all the NHS.

“It is important to remember that NHS deficits are actually concentrated in a relatively small number of organisations with over 50 per cent of the deficit in just six per cent of trusts. However, whilst the severest deficits are concentrated in a minority of organisations, lots of trusts are facing challenges because of the decisions taken this year to reach overall balance, such as top-slicing.

“As the Committee recognises, there is no single reason why NHS organisations are in deficit despite record investment. Short-term pressures such as national targets and underestimates of the costs of some pay deals have put enormous strain on the service. But investment in pay and increased staff was the right thing to do to enable us to retain staff and improve patient services. Longer-term issues such as unresolved structural problems have been exposed by changes to accountancy rules.

“We are pleased that the Committee has recognised the difficulty faced by organisations because of NHS accounting rules. The NHS Confederation continues to be disappointed that the Department of Health still has not revised the NHS accounting rules, also known as the Resource Accounting and Budgeting (RAB) principle, which means that many trusts in financial difficulty are, in effect, penalised twice. We are continuing to lobby the Department of Health hard to take action on this matter.

“Finally, in many trusts clinicians do take responsibility for finances and this is a key indicator of success. Effective financial management requires a partnership between clinicians and managers at all levels.”